KeyCorp Earnings: What to Watch For

Earnings season is here once again. We're only a few days in, but we have already seen some impressive numbers from banking behemoths JPMorgan Chase, Wells Fargo, and Citigroup, with Bank of Americareleasing earnings this morning. While these results are important to those of us that follow the banking sector, my interest lies in some of the smaller banks beyond the behemoths.

With that in mind, I turn my attention to a regional bank that will be reporting earnings Thursday morning. Here are some things I will be watching when it comes to KeyCorp (NYS: KEY) .

Continued balance sheet improvement
KeyCorp is the 29th-largest bank based on total assets, and struggled through the 2008 financial crisis, reporting losses in 2008 and 2009. However, the bank has since returned to profitability, and has been working to improve the quality of its balance sheet, reducing nonperforming assets from a high of 3.8% to its current 1.4%.

What analysts are expecting
Fewer nonperforming loans and other improving metrics would help the bank meet analysts' expectations this quarter. Analysts are expecting revenue and earnings in line with the same quarter last year, with $1.0 billion in revenue and $0.21 in earnings per share, and the bank should continue to reap the benefits of passing the Fed stress test this March, something Bank of America and Citigroup failed to do.

What else to expect
One final thing I will be paying particular attention to will be references to new loans originated. Not only do new loans help lower the percentage of nonperforming loans, but it also reiterates that the bank trusts its balance sheet enough to loan more money to consumers. An increasing "good" loan portfolio should help place KeyCorp alongside peers such as M&T Bank (NYS: MTB) and other regionals in stepping up mortgage lending country-wide.

KeyCorp is a prime example of a regional bank, and some of the best opportunities over the next few years can be found among regional banks, including one small, under-the-radar bank. It's been called one of The Stocks Only the Smartest Investors Are Buying. You can learn about it, and more, in our exclusive free report. Just click here to keep reading.

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Robert Eberhard has no positions in the stocks mentioned above. Follow him on Twitter, or click here to see his holdings and a short bio. The Motley Fool owns shares of Bank of America, Citigroup, JPMorgan Chase, KeyCorp, and Wells Fargo. Motley Fool newsletter services recommend Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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